Avon and Wiltshire Mental Health Partnership NHS Trust - Uncovering energy cost savings for your Trust - Inenco
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Avon and Wiltshire Mental Health Partnership NHS Trust Uncovering energy cost savings for your Trust
Reducing energy spend to help
protect frontline services
Against a backdrop of squeezed budgets and challenging targets,
we know that rising energy costs can place NHS organisations under
significant strain. Our clients tell us budget certainty is often one of their
top priorities; locking in energy costs to avoid nasty surprises within a
financial year.
NHS Trusts energy costs could increase by up to 45% Most NHS Trusts buy using a “short term buying
by 2020 compared to 2016 levels. We understand window”; typically, as late as 6 months prior to the
that your organisation could be facing difficult start of their annual contract. Although this might
decisions. How can you mitigate the impact of rising provide budget certainty on an annual basis, it could
prices and avoid diverting resources away from also be a high-risk strategy which sees a huge swing
frontline services and impacting patient care? in energy price variation.
At Inenco, we work with nearly 20% of NHS Trusts and You could still enjoy protection from rising prices but
procured £78 million of energy last year. This gives us benefit from more freedom to unlock lower prices or
the insight and experience to reduce costs and carbon improve forecasting and stability with a longer-term
through better buying practices, as well as getting to strategy. This year, we have already saved NHS Trusts
grips with energy data to identify saving opportunities like your millions of pounds. Will you join the growing
across the organisation. number of Trusts exploring a better way to reduce
your energy costs and protect frontline services?
From direct savings to cost avoidance, there are
ways to mitigate the impact of rising prices. We can
help you to explore new procurement strategies
that secure a better energy price or reduce your
consumption through energy saving opportunities
with short payback periods.Executive Summary:
Your energy cost savings
This special report for Avon and Wiltshire Mental Health Partnership NHS
Trust has been prepared by Inenco’s analysts using publicly available data
on your energy consumption and benchmarking your organisation against
others with a similar energy profile. Our insight shows that you could
enjoy significant savings by taking a fresh approach to energy, without the
need for upfront investment or strain on your internal resources.
Annual Energy Spend £1,396,396
The analysis contained in this Report is based on the energy Approximate annual
consumption data for your Trust contained in the 2017/18 energy spend
Estates Return Information Collection (ERIC).
Procurement £101,950
By moving to a better buying strategy and longer buying window, average savings
you could enjoy significant annual savings without losing budget
certainty: our longer term trading strategy protects you from
price rises but gives you freedom to act when the market falls.
Analyse & Act £48,020
Our NHS energy experts can typically identify at least 5% of total average savings
electricity spend in organisations like yours by conducting a
thorough review of energy use and costs, from consumption to
reviewing the ‘non-commodity charges’ that you pay.
In total, there is an opportunity for Avon and Wiltshire Mental
Health Partnership NHS Trust to uncover an average of £149,970
per annum in cost avoidance strategies.
That could be enough for an extra
6.3 nurses per year!*
*Based on an average annual salary of £23,825, reference: payscale.com2. Procurement
A Missed
Opportunity £500,000
Electricity
Taking a “like for like” comparison £400,000
of your buying strategy, Inenco
£300,000
would have delivered material
£397,069
£389,723
£/MWh
£375,445
benefits to the Trust over a four
£341,441
£336,819
£325,017
£200,000
£310,244
£295,883
year period.
£100,000
Our analysis is based upon the
0
2017/18 ERIC data and our 14-15 15-16 16-17 17-18
assessment that the Trust’s total CCS
spend was £1,396,396. Inenco
Inenco’s ‘Options’ portfolio offers
NHS organisations the ability take
advantage of falling prices, whilst
protecting them from any rises in
the market. We can offer budget
certainty with flexibility.
Over the last four years, Avon Gas
and Wiltshire Mental Health
£350,000
Partnership NHS Trust could have
£300,000
saved £395,788 by using Inenco’s
“Options” portfolio. The adjacent £250,000
£/MWh
analysis shows a snapshot of the £200,000
£312,116
relative performance of Inenco vs.
£248,070
£248,544
£242,746
£150,000
£208,587
£207,849
£202,420
£182,863
Crown Commercial Services over £100,000
the past four years. £50,000
0
Missed savings
14-15 15-16 16-17 17-18
CCS
opportunity of Inenco
£98,947 p.a
(average)Forward thinking…
Our earlier analysis illustrates how we have helped Trusts like yours to successfully counter continued
increases in wholesale energy costs through optimised wholesale energy trading.
It’s time to act.
Prices are forecast to increase for the foreseeable
Long Term Gas & Electricity Prices
future.
£60
The best way to optimise budgets and forecasting
is to take a longer-term approach to energy £55
£/MWh
buying.
£50
We recommend a buying window to at least April
£45
2023.
£40
This mitigates your exposure to price risk and Apr 20 Apr 21 Apr 22 Apr 23
allows for long term financial planning and
stability. Unit Cost Gas
Unit Cost Electricity
The material benefit for long term contracts:
Anticipated
Utility Commodity Apr 20 Apr 21 Apr 22 Apr 23
Cost
Total Commodity Cost Elec (£) £461,363 -£26,658 -£50,428 -£78,820 -£100,567
Total Commodity Cost Gas (£) £299,087 -£32,774 -£34,322 -£37,209 -£47,023
Anticipated Annual Saving (£) -£59,432 -£84,750 -£116,028 -£147,590
Current market pricing shows that future years are trading at a discount to the near term (April 2020) – a
phenomenon in the market known as backwardation. However, this opportunity may not remain indefinitely:
acting swiftly could lock in price savings for years to come. Adopting a strategy for the next four years means
you can still protect yourself against upward movements or act if prices drop again.
Based on these trends, by contracting with Inenco from April 2020
you could enjoy an anticipated total saving of £407,801 over four
years.
This benefit does not factor in any additional improvements made by
Inenco’s traders on your behalf through a Risk Management Strategy
(trading).
Future potential savings of £101,950 p.a. (average)3. Analyse & Act
Mitigate rising costs
Securing a better wholesale price is essential to driving down energy costs, but 60% of the energy bill is
made up of non-commodity charges. Avon and Wiltshire Mental Health Partnership NHS Trust could see these
taxes, levies and system charges increase by up to £91,307 p.a.
Mitigate the impact of non-commodity costs by up to £48,020.
Inenco can help you to limit the impact of rising costs by assessing your non-commodity charges and by
helping you to reduce energy consumption.
Our Analyse & Act programme carries a typical annual saving of 5% of total electricity spend for organisations
like yours. Our consultants help you to extract real insight and derive value from your energy data to ensure
robust, ongoing cost avoidance and savings.
Our analysts and engineers use advanced software to overlay weather data, operating hours, processes and
more – to discover how your energy consumption and total energy cost comes about. This approach unearths a
wide range of opportunities across your portfolio.
Using pioneering techniques, we tie together advanced data mining techniques, intuitive data visualisation and
experienced energy engineering insight to give you an in-depth, multi-faceted view of your energy use and costs
along with our expert recommendations.
We know that the cleanest and greenest energy is the energy you never use.
Our approach is as follows:
1 Once we’ve agreed a starting point to measure performance against, we’ll
identify energy cost elements and undertake advanced analysis.
2 Our sector experts recommend solutions under two discrete reviews:
– Consumption measures review
– Non-commodity charges review
3 Implement the agreed practical solutions and measures
4 Verify the performance and outcomes.
Mitigate rising non-commodity costs by £48,020 p.a.Inenco could save Avon and Wiltshire Mental Health Partnership NHS Trust over £149,970 each year through a more efficient procurement strategy and a proactive approach to cost and consumption reductions. Our public sector team work with NHS Trusts across the country to drive down costs and improve forecasting abilities. Get in touch today to discuss what we could do for Avon and Wiltshire Mental Health Partnership NHS Trust. Please contact me directly to discuss how we could help Mark Winn Lead Consultant: Public Sector Direct dial 01253 785 294 email mark.winn@inenco.com or visit www.inenco.com/nhs-trusts
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